[Solved] With reference to physical capital in Indian economy, consider the following pairs: Items : Category 1. Farmer’s plough Working capital 2. Computer Fixed Capital 3. Yarn used by the Fixed capital weaver 4. Petrol Working capital

Q57. With reference to physical capital in Indian economy, consider the following pairs:

Items : Category

1. Farmer’s plough Working capital

2. Computer Fixed Capital

3. Yarn used by the Fixed capital

weaver

4. Petrol Working capital

How many of the pairs given above are correctly matched?

1. Only one
2. Only two
3. Only three
4. All four

Answer: 2

Fixed capital represents the long-term assets that contribute to foundation and growth. These assets, including buildings, machinery, and equipment, are not intended for immediate turnover but serve as the infrastructure necessary for sustained operations over an extended period. Farmer’s plough and computer are classified as fixed capital because they are long term assets that provide benefit over multiple production cycles. Hence pair 1 is not correctly matched and pair 2 is correctly matched..

• Working capital addresses the short-term financial needs essential for day-to-day operational activities. Both

petrol and yarn are raw materials consumed within a single production cycle and are essential for the day to day operations. Hence they are categorised under working capital.

• So, pair 3 is not correctly matched and pair 4 is correctly matched.